Rocket Scientist

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DEFINITION of 'Rocket Scientist'

In the world of finance, these are people with science and math degrees who work in the finance field building highly advanced quantitative finance models. These models help banking, insurance and investment firms to price financial instruments.

BREAKING DOWN 'Rocket Scientist'

If an investment firm hires a PhD student with a background in theoretical physics to create a model that prices futures and options, that person would be considered a "rocket scientist" by the traders in the investment firm because of the complexity and skill required to create these models that help traders of futures and options.

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RELATED FAQS
  1. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  2. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  3. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  4. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
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    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

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